The global oil market is witnessing a surge in prices, with Brent crude, the international benchmark, reaching $79.76 per barrel on Sunday. This represents a significant increase from the $72.88 recorded in December 2024 and has implications for refined petroleum product prices, particularly in Nigeria. This upward trend is primarily attributed to geopolitical tensions, including sanctions on Russian oil exports, which have disrupted supply chains and created uncertainty in the market. Coupled with this, seasonal demand fluctuations in colder regions further exacerbate the pressure on supply, pushing prices higher. The impact of this price surge is already being felt in Nigeria, with reports of increasing diesel prices at various fuel depots. This development is expected to ripple across the country, affecting transportation costs and the prices of other goods and services.
The Nigerian fuel market is particularly vulnerable to fluctuations in global crude oil prices due to its heavy reliance on imports for refined petroleum products, especially diesel. Many depot owners in Nigeria depend on imported diesel to meet domestic demand, making them directly exposed to changes in international prices. With the rise in Brent crude, importers are compelled to adjust their prices to reflect the higher procurement and shipping costs. This cost increase is then passed on to consumers, resulting in higher fuel prices at the pump. The recent price increases observed at various depots in Lagos, such as Nipco and Prudent, are indicative of this trend and signal a potential widespread increase in fuel prices across the country in the coming days. The current situation underscores the vulnerability of Nigeria’s fuel market to external shocks and highlights the need for greater domestic refining capacity to mitigate the impact of global price fluctuations.
The connection between crude oil prices and the cost of refined products like diesel is well-established, with Brent crude serving as a key benchmark for pricing. As the cost of crude oil rises, the input costs for refineries increase, directly impacting the price of the refined products they produce. This relationship is amplified in Nigeria due to the limited domestic refining capacity, making the country heavily reliant on imported refined products, the prices of which are directly linked to global crude oil benchmarks like Brent. The current price surge in Brent crude, therefore, translates directly into higher prices for imported diesel, putting upward pressure on domestic fuel prices. This underscores the interconnectedness of the global oil market and the vulnerability of countries like Nigeria that are heavily reliant on imports.
The recent price increases observed at Nigerian fuel depots are a direct consequence of the surge in Brent crude prices. Nipco depot in Lagos, for example, saw a N70 increase per litre of diesel, raising the price from N1,050 to N1,120. Similarly, Prudent depot recorded a price increase, closing the week at N1,045 per litre, up from N1,025. These localized price hikes are indicative of a broader trend and point to the likelihood of further increases in the coming days. Oil and gas experts predict that depot owners will likely adjust their prices upward on Monday in response to the Brent crude surge, putting further pressure on consumers and businesses that rely on diesel for transportation and other operations.
Industry experts corroborate the observed trend, predicting further increases in fuel prices, particularly diesel, in the coming days. Olatide Jeremiah, CEO of petroleumprice.ng, notes that the rise in Brent crude prices is a major driver of this trend. He points out that a significant portion of Nigerian oil marketers rely on imports, making them particularly susceptible to fluctuations in global crude oil prices. With Brent crude approaching $80 per barrel, importers are expected to adjust their prices upward to reflect the increased cost of procurement and shipping, a move that will inevitably translate to higher pump prices for consumers. This prediction reinforces the expectation of further price increases and underscores the challenges faced by a market dependent on imported refined products.
The current situation raises concerns about the potential impact on the Nigerian economy. The Federal Government’s oil price benchmark in the 2025 budget estimates is $75 per barrel. With Brent crude already exceeding this benchmark, there are implications for budget projections and potential adjustments may be necessary. Moreover, higher fuel prices will likely contribute to inflationary pressures, increasing the cost of transportation and goods, and impacting household budgets. This situation highlights the vulnerability of the Nigerian economy to fluctuations in the global oil market and underscores the urgency of developing domestic refining capacity to mitigate the impact of future price shocks. The ongoing trend of rising Brent crude prices and its direct impact on domestic fuel prices necessitates a comprehensive strategy to address the long-term challenges facing Nigeria’s fuel market. This includes investing in domestic refining capacity, exploring alternative energy sources, and implementing policies to mitigate the impact of global price volatility on the Nigerian economy.
